Price & Cost Transparency: Understanding the Issues – Shaping the Agenda

1. Price & Cost Transparency: Understanding the Issues – Shaping the Agenda Consumer-Purchaser Disclosure Project: Invitational Working Session May 25, 2006

2. Agenda • Goals, Drivers & Context • Audiences for Price Information • Defining Price & Cost Information • Examples of Price Transparency • Major Issues and Questions

3. Why New Attention to Price/Cost? • Consumer Demand • Increased cost sharing • More consumers in plans with coinsurance • Equity concerns regarding pricing for the uninsured • Private Purchaser • Inclusion of cost/price information in NCQA new health plan “Physician/Hospital Quality” Accreditation Module • Push for efficiency leading to cost alone • State Interest • Legislation mandating publication of chargemaster • Concern for equity of pricing for the uninsured • Public reporting efforts • Federal Interest • Price transparency core element of Administration Initiative • CMS Request for Comment (Fed.Reg. due 6/12/06) • House Ways & Means Hearing

4. Goals of Price/Cost Transparency • Promote higher value – linking quality and cost • Enable consumers to make better informed choices (especially as they bear more direct out-of-pocket exposure) • Bring market forces to bear on providers to reduce costs • Encourage payment system overhaul by making transparent current dysfunction

5. Administration Comment Request • “Any” ways HHS can encourage transparency in health care quality and pricing – voluntary or through regulatory authority • How could CMS use of its regulatory authority to enhance transparency of quality and pricing information? • Would the publication of Medicare rates be helpful or harmful? • Should CMS publish is risk-adjusted DRG rates for every hospital? • Should HHS establish conditions of participation for hospitals that require posting of prices and/or policies regarding discounts and other payment options for uninsured patients? • Should CMS publish total payments over an episode of care?

6. Context: Who’s Doing the Spending

7. Context: Where’s the Money Going

8. Nonelderly Coverage

9. Context: The Uninsured

10. Plan Enrollment of Covered Workers Source: Kaiser/HRET 2005 Annual Employer Benefits Survey

11. Costs in Context – Consumers in PPOs

12. Costs in Context – Consumers in HDHPs

13. Medicare Coverage

14. Sources of Payment for Medicare Beneficiaries Source: Kaiser Family Foundation, Medicare Chartbook 2005

15. Medicare Out-of-Pocket Spending Source: Kaiser Family Foundation, Medicare Chartbook 2005

16. MedicareOut-of-Pocket Source: Kaiser Family Foundation, Medicare Chartbook 2005

17. Medicare Out-of-Pocket for those with High Costs Source: Medicare Beneficiaries Out-of-Pocket Costs: Are Medicare Advantage Plans a Better Deal? May 2006, Commonwealth Fund

18. Remember the Value Equation SAVE LIVES, SAVE MONEY Adapted from Regence Blue Shield

19. Price/Cost Information Users • Consumers • Providers • Plans • Purchasers

20. Consumers’ Circumstances • Plan/Payer Status • Health plan enrollee • Medicare FFS • Uninsured • Health Status/Condition • Procedure/Medical • Urgent/Non-urgent • Chronic • Preference Sensitive • Education/Information Seeking See Appendix for Consumer Vignettes

21. ALL Consumers Need Price Information that is “QUAARP”: • Linked directly to Quality measures (outcomes, patient experience, compliance with EBM) • Understandable • Actionable • Accessible • Relevant to their circumstances (health and coverage status) • Predictive (accurate)

22. Consumers’ Needs by Payer Status (“QUAARP” Plus)

23. Consumers’ Needs by Health Status/Issue (“QUAARP” Plus)

24. Purchasers’ Information Needs

25. Health Plans’ Information Needs

26. Providers’ Information Needs

27. Consumer Care Types • Procedures: • Outpatient • Inpatient (e.g., Hip Replacement, Delivery, CABG, Disk Surgery) • Discrete Services • Preventive Screening • Tests (e.g., MRI, biopsy) • Prescription/OTC Drugs • Ongoing Chronic Care • Diabetes • Asthma • COPD • Depression • Emergent and Very Expensive – “Never-Relevant Events” • Heart Attack • So expensive – OOP irrelevant

28. Cost/Service Categories (1 of 2) • Total Costs All Care: costs for all medical expenses attendant with ALL care received by an individual, family OR population. Issues: • Most relevant information for an employer or public purchaser • Needs effective risk adjustment for comparative purposes • Increasingly “plan chooser tools” are estimating consumers’ total costs including share or premium and all out-of-pocket • For consumer can address the unknown of future care needs • Episode of Care Costs: costs for all medical expenses attendant with a particular procedure including all professional costs, therapy, diagnostics and drugs. Issues: • Rarely available or made actionable for consumers or providers • Annual Treatment Costs: costs for all medical expenses attendant with a particular chronic condition (e.g., asthma), including all professional costs, therapy, diagnostics and drugs. Issues: • Average estimates may vary greatly • Difficult to predict actual scope of some visits

29. Cost/Service Categories (2 of 2) • Inpatient Costs: costs of particular procedures (e.g., hip replacement). Issues: • Cost may only reflect partial elements of total costs (e.g., only those of inpatient facility, not ancillary physician costs) • Outpatient Costs: costs of typical outpatient procedures. Issues: • Costs likely to reflect facility and professional service fees, but may • Office Visit/Unit of Service: costs for “typical” office visits (e.g., physician visit, physical therapy, MRI, x-ray). Issues: • Difficult to predict actual scope of some visits • Unit of Service: costs for specific tests, services (e.g., charge master-detail). Issues: • Difficult to predict actual scope of some visits • Prescription Drug: costs of prescription drug associated with particular treatment. Issues: • Cost for what course of treatment • Whether costs compared to alternatives

30. Cost Information Displays • Full charges (no health plan discounts) • Discounted rates (health plan discount applied) • Average costs (NOT provider specific; may be commercial, Medicare or combined) • Range of costs (NOT provider specific; may be commercial, Medicare or combined) • Provider specific costs – charges, discounted or relative • Cost to member/Out-of-pocket

31. Sources of Price Information • Health plan • Multiple health plan • Medicare • Provider (e.g., hospital)

32. Examples of Price Information In the Market • New Hampshire: Department of Insurance and Hospital Association • Consumers Union (Prescription Drugs) • United Health Plan • Aetna

33. Presentations

35. New Hampshire Price ToolsDepartment of Insurance: “NH Health Cost” @ www.nhcost.orgHospital Association: “New Hampshire PricePoint” @ www.nhpricepoint.org

36. Sample Presentations • Consumers Union (Prescription Drugs) • United Health Plan • Aetna

37. Major Alternatives: Strengths, Weaknesses and Recommendations • Price in Absence of Quality Information • Total Costs of Care – Population or Multi-Condition • Full charges (no plan/other discounts) • Actual plan rates • Average, relative or range of costs • Others

38. Administration Comment Request • “Any” ways HHS can encourage transparency in health care quality and pricing – voluntary or through regulatory authority • How could CMS use of its regulatory authority to enhance transparency of quality and pricing information? • Would the publication of Medicare rates be helpful or harmful? • Should CMS publish is risk-adjusted DRG rates for every hospital? • Should HHS establish conditions of participation for hospitals that require posting of prices and/or policies regarding discounts and other payment options for uninsured patients? • Should CMS publish total payments over an episode of care?

45. Major Outstanding Questions

46. Price TransparencyAppendix • Consumer Vignettes • Covered Workers’ Cost-Sharing and Coinsurance • Medicare Benefits and Cost-Sharing • Consumer-Purchaser Disclosure Project Information

47. Consumer Vignettes (1 of 2)

48. Consumer Vignettes (2 of 2)

49. Coinsurance for Covered Workers

50. Cost-Sharing for Covered Workers